To achieve scale in the new value-based model, it’s critical to determine the appropriate next steps, Ernst & Young health practice leader Carole Faig advises.

America’s healthcare landscape is undergoing one of the largest and most transformative changes in its history.

As the baby boomer generation continues to age, health systems are seeing higher and higher patient volumes and associated increases in chronic illness. As a result, the cost of care delivery is rising, and organizations are under mounting pressure to control – or even reduce – these costs; all with the increasing necessity to add value.

As disruptive as this new reality is the uncertain future of the regulatory environment sits near the top of the worry list for CEOs and other leaders in the health space. For them, it’s taken on the form of an organizational fog, obscuring their path toward building a successful and sustainable business model. Indeed, as efforts to repeal and replace the Affordable Care Act (ACA) continue, health leaders must accept the nature of this obstacle as a part of larger, emerging trends.

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

The above quote from famed American writer William Arthur Ward could have been addressed to every health executive currently weathering today’s health care landscape. While the future of regulatory change is certainly relevant to success, it’s a change leaders should have seen looming on the horizon for some time. Organizations that are able to adjust their sails in these turbulent winds of uncertainty – while harnessing the power of emerging trends – are the ones that will journey smoothly and successfully.

That said, four key focus areas should act as guiding beacons for hospitals looking not only to survive in, but to thrive in, today’s health care environment:

Smart growth

Health care no longer operates in a purely fee-for-service world. Instead, reimbursement models are increasingly value-based, with an eye toward improving patients’ overall health. Meanwhile, mergers and acquisitions, alliances and joint ventures are all growth paths to gain the scope and scale of services and infrastructure capabilities needed to compete and succeed in this environment.

To achieve scale in the new value-based model, however, it’s important to determine the appropriate next steps that will guide the way forward. These include: targeting the ideal strategic outcome or market positioning, identifying the gaps or risk areas within current offerings or capabilities, looking to the financial and operational metrics to help identify which structures are most optimal, and examining all the variables simultaneously, including possible organizations to align with, the strategic next step, and the best organizational and financial model for all the stakeholders involved.

IT and consumerism

Technology is enabling health care organizations to adjust their approach to business, with whom they collaborate, and how they interact with patients. To win in the emerging digital health environment, organizations must align cost, quality, patient engagement and the customer experience.

At the center of this technological sea change is the patient, who’s more networked, engaged and empowered than ever before. They’re accustomed to technology making their lives easier, and demand a similar experience in their health and wellness with simple, coordinated interactions.

The winners will be those that recognize the impact of the digital and technological future on the patient experience, and embrace it.

Cost optimization

Rather than seeking to cut costs, leading companies must focus on cost optimization, which allows organizations to reduce expenses in areas that affect patient care the least, while making investments that can achieve better and more sustainable outcomes in the long term.

Optimizing cost and experience includes a diverse mix of strategies that produce more efficient, effective and sustainable care delivery models. In this approach, the operational, clinical and IT teams of an organization are closely integrated, ensuring optimization across the whole of the care delivery spectrum.

By shifting to a cost-optimization approach, hospitals can realize a type of financial stability that empowers them to look past the present and invest in opportunities for growth and improvements in value-based care.

Excellence in compliance

Forward-thinking compliance activities must become an integral aspect of every healthcare organization. And the reason is simple: the cost of regulatory compliance is high, but non-compliance is significantly higher.

Leading health organizations have learned to foresee and prepare for regulatory scrutiny. Integrated compliance capabilities build confidence among stakeholders, members and regulators. This proactive model empowers leaders to grow their health care organizations with the confidence to enter uncharted territory.

Transforming from a react-and-respond approach to a proactive stance does more than protect an organization’s assets and reputation: it enables growth.

Carole Faig is the Deputy Leader of the US Health Practice and Southwest Region Market Segment Leader for Ernst & Young LLP. She is based in Houston, Texas, and can be reached at carole.faig@ey.com.

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